Centralisation plus complexity: a fatal formula for welfare reform

According to the National Audit Office, the Government’s flagship welfare reform policy – Universal Credit – is in trouble. The purpose of the new benefit is to combine six existing benefits into a single payment, with the aim of ensuring that work always pays more than life on the dole.

Right in principle, the problems with Universal Credit are all in the implementation, especially when it comes to IT. Back in 2011, John Seddon wrote an open letter to DWP ministers to warn them that the standard Civil Service approach would end in tears.

Following the NAO report, it’s worth highlighting a few of the key paragraphs (the whole letter can be found on the Opportunities website):

• “Let us be clear. This... is not about the concept of... Universal Credit...  It is about the design and implementation of its delivery. In this respect we should begin by underlining that there is much in the coalition’s approach to public-sector reform that we support.  Getting rid of targets and central directives, abolishing the Audit Commission and encouraging the development of locally relevant services are all positive moves.”:
• “But the weakness in the coalition’s approach is the continuing unquestioning faith in economies of scale…”

Once again, the DWP has opted for a highly centralised approach facilitated by a shiny new IT system. What could possibly go wrong?

• “It would appear to be a simple proposition: take costs out of service provision by putting the provision online and/or in a call centre. That these ‘channels’ represent cheaper transactions is not in doubt.  But it does not follow that overall the service will be cheaper to deliver.  The crucial factor is the complexity of the service.  When what is being delivered is simple and unvarying, moving it to telephone or internet channels may be effective.  When it is complex and variable, however, it is an expensive mistake, driving costs up and the quality of service down.”

The basic equation, which applies to just about any area of public policy, is as follows:  centralisation + complexity = disaster. Bitter experience has demonstrated the accuracy of this formula on countless occasions – and yet this Government, like its predecessor, is in thrall to what Seddon calls “command-and-control management”:

• “[This is] the idea that services are merely ‘transactions’… It is a purely quantitative approach that leads service managers to focus on solving the following equation: How much work is coming in?  How many people do I have?  And how long do they take to do things? All work is treated alike as activity to be managed.”

If this were really true, then of course it would be possible to design a fixed system to deal efficiently with a limited number of interactions between the users and providers of the service in question. Furthermore the simplicity of the system would allow it to be centralised, thereby achieving the desired economies of scale.

But it isn’t true. Getting people off benefits and into work means dealing with complex personal situations and joining up the various bits of the public sector that support (but sometimes hold back) dependent individuals. It should be screamingly obvious that a flexible, face-to-face, locally-based response is what is required – which is precisely what you’re not going to get from a regional call centre.

Theresa May versus the modern day slave trade

Back in March, the Deep End featured a post about ‘human trafficking’ entitled Here’s a real challenge for Theresa May: End slavery in Britain. 

This is how it concluded:

• “By the very nature of the crime, the victims of modern slavery are among the most vulnerable and marginalised people in our society. They have no voice, no influence, no impact at all on mainstream public opinion.
• “This is how the most appalling things can go on with no effect on the political agenda. Ignored by the media, overlooked by Parliament and merely managed by officialdom. This is, therefore, an issue that cries out for true leadership.”

As you may have seen in the weekend press, the Home Secretary, backed by the Prime Minister, has shown that leadership – and is taking action to deal with an evil that has been tolerated for far too long. Writing for Daily Telegraph, Fraser Nelson comments on the latest developments:  

• “The Prime Minister has now agreed to pass a Modern Day Slavery Bill, which aims to extinguish today’s slave trade as surely as William Wilberforce’s Bill extinguished the old one. Its premise is that the Tories, who led that fight two centuries ago, have some unfinished business.”

This is a major breakthrough for the Centre for Social Justice (CSJ), whose report It happens here, documents the reality of modern day slavery in 21st century Britain. Fraser Nelson explains why it is so important that we recognise this crime for what it is:

• “If Wilberforce and Thomas Clarkson had spent the 1780s mumbling about ‘human trafficking’, it’s unlikely that anyone would have paid attention. It was Barack Obama who said last year that it was time to call modern slavery by its name. If girls are being forced into domestic service and beaten if they try to leave, it’s slavery. If Lithuanian workers are being kept in debt bondage working on a Kent chicken farm, that’s slavery.”

Of course, these abuses are already serious offences under British law, so why is the response of the British state so deeply inadequate? Drawing on the CSJ’s report, Nelson outlines the basic weaknesses of the existing system:

• “Social workers often have no idea how to recognise, let alone treat, modern-day slaves. It is estimated that local authorities lose track of three in every five who go into their care. The police, the lawyers and the Crown Prosecution Service seem utterly bamboozled...
• “Part of the problem is that human trafficking is not a performance indicator for the police. As one law enforcement official put it, there is more incentive to investigate the theft of some tools from a garden shed than a case of human trafficking...
• “This is why Britain has become the perfect Petri dish for this new evil. We have 1,200 foreigners arriving each day; a capital city where a third of the population are immigrants; and a confused criminal justice system that finds it easiest to go after the victims.”

Thankfully we have a Home Secretary who has shown herself willing and able to get a grip of the situation:

• “...Theresa May is a very unusual politician: one that wants to be known by what she does, not what she says. Her Modern Slavery Bill will bring all the various laws together, and ensure that the issue is a top priority for her proposed National Crime Agency, which starts work in October. Catching a human trafficker will be as important as catching an arms dealer, and police will be given clear instructions that the victims are not to be prosecuted.” 

In this era of austerity, it is right that we should root out the waste caused by bureaucratic inefficiency. But it is even more important that we should concern ourselves with the evil that creeps in when authority fails. 

Heresy of the week: Let’s abolish the summer holidays

Matthew Yglesias does not like school summer holidays. In fact, writing for Slate, he comes across like a warm-weather Ebenezer Scrooge:

• “There’s no other public service that we would allow to just vanish for months at a time. To have no Army in February, no buses or subways in March, airports closed down for all of October, or the police vacationing en masse in December would be absurd. Schools, it turns out, matter a lot, too, and having them shut down all summer critically undermines them.”

What a killjoy! And yet he makes a powerful case. It seems that the summer break is seriously bad news: 

• “The burden on parents is segmented by income, and the impact on children is as well. A 2011 RAND literature review concluded that the average student 'loses' about one month’s worth of schooling during a typical summer vacation, with the impact disproportionately concentrated among low-income students. ‘While all students lose some ground in mathematics over the summer,’ RAND concluded, ‘low-income students lose more ground in reading while their higher-income peers may even gain.’”

To make matters worse, the impact of educational outcomes is cumulative:

• “Poor kids tend to start school behind their middle-class peers, and then they fall further behind each and every summer, giving teachers and principals essentially no chance of closing the gap during the school year. Karl Alexander, Doris Entwisle, and Linda Steffel Olson of Johns Hopkins University have research from Baltimore indicating that a majority of the achievement gap between high- and low-socioeconomic-status students can be attributed to differences in summer learning loss.”

One could argue that the problem is not so much the summer break itself, but the materially and intellectually impoverished home environments of the worst-affected children:

• “…for many poor kids, subsidized school lunches on which they depend for sustenance essentially vanish during the summer months, leaving them both undertaught and underfed.”

Still, the counter-argument is that reforming the school year would be a surer way of helping these children than trying to improve their home lives (not that these approaches are mutually exclusive). Yglesias also has a riposte to those who say that shorter holidays would cost too much:

• “We could save a bunch of money by letting all the criminals out of jail for the summer months or randomly eliminate seventh grade, but that would be ridiculous.”

A longer school year would be a relatively cheap way of boosting the life chances of the most vulnerable children. After all, no additional buildings would be required – they already exist. Nor would additional staff be required – just the additional hours from the teachers we’ve already got. Moreover, any reduction in educational failure would result in long-term savings to the public purse.

There’d be a further benefit, which is not mentioned in Yglesias’s article. A school year punctuated by shorter, more evenly spaced holidays would mean that instead of grouping pupils by yearly intakes, they could be more easily grouped by half-yearly or even quarterly intakes. This would eliminate the significant disadvantage faced by the youngest pupils in each class. As any nursery or primary school teacher knows, small age gaps can make a big difference in the ability of children to keep up with their classmates.

Summer babies born to the poorest households therefore go through school at a double disadvantage. We should at least think about improving their chances.

The twisted roots of ‘care in the community’

The Americans call it “deinstitutionalization” – an uglier, if less euphemistic, name for what we call ‘care in the community’. Though now regarded by many as a disaster, there was, at the time, broad support for closing down the old asylums – which were seen as places of horror.

However, as James Panero explains in an article for City Journal, they did not start out that way – they were built by 19th century social reformers as places of genuine care for the mentally ill. It was only later that things went downhill:

• “...in the twentieth century, a shadow fell over the asylums, as doctors there began using more invasive procedures. The Austrian psychiatrist Manfred Sakel introduced insulin shock therapy, now known as insulin coma therapy, in the 1930s. Electroshock therapy arrived from Italy soon after. Both treatments induced seizures to alter brain chemistry in patients with depression and schizophrenia.”

Worst of all were various forms of lobotomy, including the horrific practice of transorbital lobotomy as developed by the physician Walter J Freeman II:

• “Freeman performed the ten-minute operation—in which he inserted long metal rods around the eyeballs of his patients and penetrated, stirred, and severed their frontal brain matter—some 3,500 times.”

Among Freeman's patients – or victims, rather – was a  23-year-old woman called Rosemary Kennedy, who was left severely disabled by the procedure. Her tragedy would have wider consequences, because her brother John – who later became President of the United States – joined with his siblings in a “crusade against institutionalization”.

And yet, for all its good intentions, the deinstitutionalization movement failed to create an effective community-based care system for people with severe mental illnesses – who we continue to fail in both Britain and America:

• “Within a year of leaving institutional care, according to researchers, half of all mentally ill patients fail to take their prescribed antipsychotic medications—a terrifying prospect for the vast numbers of patients who left the asylums under deinstitutionalization. Between 50 and 60 percent of patients discharged from state institutions were schizophrenic. Another 10 to 15 percent had been diagnosed with manic-depressive illness or severe depression.”

Panero notes that “over 90 percent of patients who would have been committed before deinstitutionalization are now out in the world.” Turned out of one kind of state institution (that was at least originally designed around their needs) many find themselves passing chaotically through other state institutions:

• “Yes, expensive institutional beds have been eliminated. But weigh those savings against the costs that must be borne by other facilities, such as emergency rooms, prisons, jails, and nursing homes. ‘Untreated mentally ill individuals revolve endlessly through hospitals, courts, jails, social services, group homes, the streets and back again,’ reports the [Treatment Advocacy Center]. ‘It is a spectacularly inefficient and costly system, perhaps best symbolized by ‘Million Dollar Murray,’ a mentally ill homeless man who cost Nevada more than $1 million, mostly in emergency department costs, as he rotated through the system for 10 years’ Consider, too, the dollar burden that the mentally ill have piled on law enforcement agencies.”

Sadly, the American hopes expressed in the term ‘deinstitutionalization’ have proven to be every bit as ironic as the British vision of ‘care in the community.’

Heresy of the week: The rich keep getting richer because the state keeps giving them money

In the run-up to the financial crisis of 2008, the rich got a whole lot richer. But they must have taken a hit in the years since, right?

Not in America, they haven’t. Writing for Business Insider, Henry Blodget tells it like it is: 

• “In case you were hoping that America's three-decade-long trend toward extreme wealth inequality was starting to reverse itself, Pew has some bad news for you. Nothing has changed. The rich are still getting richer... and everyone else is still getting hosed.
• “The richest 7% of American households – 8 million with more than $836,000 in net worth – did quite well from 2009 to 2011. Their average net worth rose from $2.5 million to $3.2 million, a 28% jump.
• “The other 93% of American households, meanwhile, lost out. Their average net worth dropped from a measly $140,000 to $134,000.”

As a result the share of the nation’s wealth owned by the richest 7% has increased from 56% to 63%.

How can this be happening? And under that nice Mr Obama too!

• “The source of this relative wealth bonanza for the richest households, not surprisingly, is the stock market. America's richest households own most of the stocks in this country. The stock market has more than doubled since the 2009 lows and is hitting new highs.”

But why are shares doing so well when the economy is doing so badly? As we’ve noted before on the Deep End, quantitative easing is driving demand for stocks and securities – and, therefore, pushing up their prices. And that’s not the only way in which governments are effectively giving money to the rich.

Consider the case of Apple – one of the biggest and richest companies on the planet – which is borrowing $17 billion to buy back its own shares when it’s sitting on savings of $145 billion. ‘Buttonwood’, of the Economist, asks and answers the obvious question – “why doesn't [Apple] just use its cash to do the same thing?”:

• “First, because a lot of that cash is overseas, and bringing it back to America would incur a tax charge. Second, because interest rates are low and debt interest is tax-deductible, making this look a great arbitrage.”

Good for Apple, not so good for the ordinary American taxpayer:

• “Apple's money will still sit overseas and not be invested at home to create jobs. Apple's tax bill will fall, as it offsets the interest payments against its profits. The buy-back will probably push up the share price in the short term… boosting the value of executive options; profits from those options will probably be taxed at the long-term capital gains tax rate of 15%, lower than the rate many workers pay.” 

And that’s not the end of the bonanza. Apple’s bond issue will generate lots of lovely fees for Wall Street bankers – “the same bankers taxpayers helped support five years ago.”

So, whether in term of QE or a distorted corporate tax system, the state is merrily shoveling cash into the gaping maws of the wealthy.

It’s time to do something about this blatant injustice, but what?

Well, our elected governments could borrow even more money and shovel it down some other throats in the hope of evening things up. This is Labour’s solution. It won’t work and will make the state even more dependent on the money men than it is now.

Instead, we need tax reform that advantages real wealth creation, not accountancy tricks; and, if we must have quantitative easing, let it be in a form that puts money in the hands of ordinary people, not just the rich.

Corporate tax dodgers make us all poorer, but the poorest people in the world suffer most

Which nation or territory is the world’s biggest exporter of bananas, would you say?

Brazil? Columbia? Malaysia? 

No, none of those. The answer, believe it or not, is Jersey (according to Paul Collier’s article on tax avoidance for Prospect).

To most of us, this Channel Island is better known for its cows and potatoes than its tropical fruit; but strange things abound in the world of corporate tax avoidance – in particular when it comes to a clever little dodge called transfer pricing:

• “The plain vanilla form of transfer pricing is for the subsidiary of a company which is based in a high-tax jurisdiction to sell its output to one in a lower-tax jurisdiction at a price below its true value. Or, with equivalent effect, it might buy an input that was over-priced…
• “The distinctive aspect of transfer pricing is that profits are shifted between countries by the artifice of accountants and lawyers rather than by relocating real economic activity. The scope for transferring real economic activity is naturally bounded by the economic characteristics of locations… In contrast, the scope for shifting profits through transfer pricing is unbounded…”

Of course, in developed countries, the tax authorities are wise to such tricks:

• “G8 countries woke up to plain vanilla transfer pricing decades ago. They now contain it through scrutinising the prices used for intra-corporate transactions and comparing them to third-party prices.”

What isn’t appreciated, however, is that in poorer parts of the world the dodgers can still get away with it:

• “[Transfer pricing] remains a severe problem in Africa since the typical tax authority lacks the capacity to scrutinise and compare prices… While there are transparent global markets in refined metals, with observable prices, there are no equivalent markets for ores. So, a mining company which sells its ore to a parent company abroad for refining can potentially use a notional ore price that keeps the subsidiary at break-even.”

So how do third world governments generate income from international corporate activity in their countries? Well, there’s one obvious way:

• “Corporate opacity not only assists tax avoidance, it is the key vehicle for corruption. In Africa, and other poor regions, corruption is a huge impediment to decent economic and political governance.”

Paul Collier calls upon David Cameron to use Britain’s chairmanship of the forthcoming G8 summit in Northern Ireland to lead an international effort to crackdown on the corporate tax dodgers.

This is something we’ve all got an interest in. For instance, if African governments could raise more money through taxation and do more to curb corruption, they’d be less reliant on British foreign aid, as supplied by those of us who do pay our taxes.

Labour’s post-war settlement is alive and well in the 21st century

Veteran lefty Ken Loach has new film out called The Spirit of ’45, a far from balanced documentary about the Attlee government.

In a thought-provoking post for the Royal Society of the Arts, Adam Lent takes issue with the idea that Labour’s post-war settlement is dead and buried, killed off by wicked Thatcherites:

• “...the narrative behind the longing for the ‘Spirit of 1945’ is wrong. Political values may have shifted unrecognisably from that period but in terms of cold hard cash, Beveridge and Attlee remain the towering figures of our age.  In fact, their importance has only grown.
• The three areas that the Attlee Government hard-wired into the fabric of state provision were pensions, healthcare and social security. A brief look at the change in the share of public spending going to these areas reveals why, far from fading, the ‘Spirit of 1945’ is in the sort of health that would make Nye Bevan proud.

The overall trend over the last fifty years is clear – public spending as a share of GDP is up and so is spending on health, pensions and welfare as a share of public spending.

The trouble is that while political support for the welfare state remains strong and broad-based, we’re finding it increasingly difficult to pay for it:

• “So the real challenge is not how we return to some lost world of pre-Thatcher glory but how we maintain a civilised and just society when the mechanism established under Attlee to do this has become unsustainable.”

Lent argues that a new guiding principle is required, but what does he have in mind? Not the Big Society, that’s for sure: 

• “...the idea that a half-baked marketing concept might genuinely recast seventy years of the Beveridge behemoth was always ludicrous.”

He also point out that while Thatcherism changed a lot of things, it too failed to slay the “Beveridge behemoth”:

• “...the right has tilted constantly at the extra role [welfarism] gives to government. Their alternative guiding principle has been the notion that the state is a malign interference in the beneficial operation of the market and its cornerstone of individual responsibility. However, despite eighteen years of Conservative Government inspired by this view… the figures above show how ineffective this has been as a mobilising ideal.”

Indeed, the reduction in public spending as a percentage of GDP achieved under Margaret Thatcher did not last and most public services were barely reformed.

So what could replace the ‘spirit of ’45’ in British hearts? Lent begins by identifying what he sees as the fundamental flaw in the post-war settlement:

• “...its deeply remedial nature: the notion that the role of the state is to pick up the pieces resulting from the failure of the market and the individual.  In short, the state steps in when things go wrong. The obvious alternative view that the state may have a role in stopping things going wrong in the first place has always been the less favoured sibling despite the fact that it is potentially just as powerful and fruitful as the remedial conceptualisation.”

The result of this, he says, is “a state state that spends more on welfare than on education... commits only 2% of the healthcare budget to prevention and public health and spends £1.5 billion on a hotchpotch of benefits for better off pensioners.”

He therefore calls for a state that  is “designed to generate success rather than ameliorate failure.” Most Conservatives would be agree with him on that. But what he doesn’t acknowledge is the possibility that it is the monolithic, top-down structure of the state that predisposes it to follow the failure model.

We will not have a “success state” until resources are radically decentralised and placed under the stewardship of those who see the state as a means of achieving the common good and not as end in itself.

Here’s a real challenge for Theresa May: End slavery in Britain

Most of the attention surrounding Theresa May last week had little to do with her responsibilities as Home Secretary. Indeed, when a report was published detailing a series of horrendous crimes, she wasn’t in the story at all.

The report, It happens here, was published by the Centre for Social Justice, and the criminal activity it documents is the practice of modern-day slavery on British soil. 

In a post for the Spectator, the CSJ’s Christian Guy explains that something we might have assumed was all in the past is still very much with us:

• “Slowly but surely, British court cases are revealing a once great nation of abolitionists to be a shadow of its former self. We often celebrate the nineteenth century anti-slavery movement and its precious victory. We hail their achievement and honour our Parliament’s noblest hour.
• “But like weeds in a neglected garden, slavery has returned. Its roots remained intact – inherent in humanity’s darkest weaknesses. Today, it is aggressive and hidden.  It lives in the shadows of Britain’s cities, towns and villages...
• “Across and within UK borders, vile child and sexual exploitation, forced labour and domestic servitude trap people in terrible torture… many are threatened with rape, death or brutal attacks on their families back home at the slightest hint of rebellion. There are growing numbers of British-born victims too. School girls moved around the UK at weekends – raped numerous times a night – and back in the classroom on Monday. This is a modern day underworld.”

How can this be happening here, in Britain, in the 21st century? Well, for a start, it might help if we could bring ourselves to recognise slavery for what it is:

• “In the hands of international bureaucrats the problem has become better known as ‘human trafficking’.  But just like ‘collateral damage’, these words mask the terror, injustice and nature of abuse inflicted on those who are its victims.

One could say the same about the so-called ‘grooming’ in which children have been lured into the slavery of forced prostitution. The labour exploitation of immigrants and homeless people by many so-called ‘gangmasters’ also amounts to slavery, such is the coercion involved:

• “Behind closed doors, these victims are voiceless and petrified. Most, of course, are not free to walk away.  And those who can often don’t, fearing immediate arrest or deportation. And those who do escape receive inadequate support.”
• “...Police officers, social workers, health professionals and prison governors regularly fail to recognise slavery victims when they come face-to-face with them.  Police officers arresting a female victim who had escaped from a brothel because she didn’t have a passport is one such example of this.”

As the department with overall responsibility, the Home Office claims to have the right systems in place for coordinating an effective response. However, the CSJ report argues that this isn’t in fact the case.

By the very nature of the crime, the victims of modern slavery are among the most vulnerable and marginalised people in our society. They have no voice, no influence, no impact at all on mainstream public opinion.

This is how the most appalling things can go on with no effect on the political agenda. Ignored by the media, overlooked by Parliament and merely managed by officialdom. This is, therefore, an issue that cries out for true leadership.

The blood-soaked history of hatred against the middle class

Anti-Semitism has been called the oldest hatred. In its long and dark history, it has taken many forms – tribal hatred, religious hatred, racial hatred and national hatred. 

In a book review for Tablet, Adam Kirsch looks at a new historical account, which suggests that an age-old intellectual hatred had its part to play too:

• “The title of David Nirenberg’s new book, Anti-Judaism: The Western Tradition, uses a term pointedly different from the one we are used to. The hatred and oppression of Jews has been known since the late 19th century as anti-Semitism—a label, it is worth remembering, originally worn with pride by German Jew-haters. What is the difference, then, between anti-Semitism and anti-Judaism? The answer, as it unfolds in Nirenberg’s scholarly tour de force, could be summarized this way: Anti-Semitism needs actual Jews to persecute; anti-Judaism can flourish perfectly well without them, since its target is not a group of people but an idea.”

By Judaism, Nirenberg doesn’t mean the religion as such, but rather a range of intellectual ideas associated (often falsely) with Jewish religion and culture. It is a fascinating and complex theory, but when Kirsch provides specific examples of what Nirenberg is getting at, what they suggest isn’t so much an ideological war as a class war:

For instance, in Ptolemaic Egypt:

• “...in which a large Jewish population was sandwiched uneasily between the Greek elite and the Egyptian masses. In a pattern that would be often repeated, this middle position left the Jews open to hostility from both sides, which would erupt into frequent riots and massacres.”

Or in medieval Europe:

• “With the rise of Catholic polities in the Middle Ages, anti-Judaism took on a less theological, more material cast. In countries like England, France, and Germany, the Jews held a unique legal status as the king’s ‘servants’ or ‘slaves,’ which put them outside the usual chain of feudal relationships… King after king plundered ‘his’ Jews when in need of cash. At the same time, being the public face of royal power left the Jews exposed to the hatred of the people at large. Riots against Jews and ritual murder accusations became popular ways of demonstrating dissatisfaction with the government...”

Though racist and eugenic ideologies came to dominate anti-Semitism in the 19th and 20th centuries, a strong class-based element persisted: 

• “...Nirenberg shows how Marx recapitulated ancient anti-Jewish tropes when he conceived of communist revolution as “the emancipation of mankind from Judaism”—that is, from money and commerce and social alienation.”

Of course, class hatred is just one ingredient in a vile mix. But we shouldn’t overlook the contribution that it has made not only to anti-Semitism, but other instances of man’s inhumanity to man. 

Consider the famines that Stalin deliberately unleashed against the Kulaks, Idi Amin’s expulsion of the Ugandan Asians, the pogroms suffered by the ethnic Chinese in 1960s and 70s Indonesia, Mao’s Cultural Revolution or the killing fields of Cambodia under the Khmer Rouge.

The extent to which ethnic hatred was involved differs from case to case, but the constant factor is that the victims were singled out, either on an individual or a communal basis, because, though lacking in political power, they had dared to better themselves by their own efforts.

We should never forget that class hatred – in particular, hatred of the ‘bourgeoisie’ – is one of the most murderous forces in history.

Fake market mechanisms will not reform our public services

It is said that some goods are too important to be left to the market – for instance, healthcare. And, yet, there are various aspects of our health and wellbeing that we routinely entrust to private sector providers. Nutrition, for instance, or the provision of clean water. Then there’s our eyesight, which, for millions of people, is tested and corrected with great speed and efficiency without a public sector provider anywhere to be seen (even with our new glasses).

But what about those needs which are simply too complex and intrinsically bespoke in nature to be supplied as a mass market product? Well, some of these can be supplied by the private sector too, but only at a price beyond the reach of many or most individuals and, were it not for careful allocation (i.e. rationing), to the public purse too.

Thus the reason why such needs are provided by the public sector is not because they alone fall into the ‘too important’ category, but because they present problems of supply and, especially, demand that can only be managed collectively. 

And yet, in recent decades, repeated attempts have been made to reform our public services by introducing market-like mechanisms – in the hope of replicating the choice, competition, efficiency and innovation associated with private sector provision.

In an op-ed for PublicServiceEurope, John Seddon identifies the central flaw of this approach:

• “The vehicle for market-making in social care is commissioning. Commissioning requires a specification against which providers can pitch a price. Ideologues believe providers will compete on price and the lowest price will win. Studying care services reveals the folly of this ideology. A citizen has a health or social care need. The need is assessed and eventually, for it can take a very long time, a service is commissioned and then provided. Boxes ticked.”

The problem here is that the “specification” is far too simplistic to properly describe the very “specific, human, peculiar and particular” needs that are supposedly to be supplied. As a result the service users keep coming back – ‘re-presenting’ – to get what they needed in the first place:

• “We then go through the same loop - assess, commission and provide - and the person represents. It is common to find that this amplification of assessment activity and service provision can be nine times, 12 times, even more than 20 times. It can extend an episode; it can become a whole life.”

Of course, this can happen without any attempt at “market-making”. Unreformed public services, can and do fail to provide what their users need. The special problem with a commissioning system though is that it artificially locks-in the failure – because as long as they meet the contractual specification, suppliers have no incentive to adapt to actual need, in fact, they may well have no way of knowing that the real need – as opposed to the bureaucratically specified need – is going unmet.

Seddon argues that free from these fake market mechanisms, “managers can discard ideology and devote their energy to designing a service that works”:

• “They build a design that is super-sensitive to people, their needs and their context. The design places the individuals' wishes at the centre of service provision. People who need help are met by people who have the expertise to help them and the services provided are truly tailored… Everyone – citizens, service professionals and providers – is happier, more motivated and more engaged. Ingenuity and innovation emerge naturally. And then the big prize is revealed. Costs fall out, dramatically.”

So should we forget reform and revert to the old top-down model of delivery?

Surely not, because Seddon’s model depends totally on the freedom to act on local knowledge. One might add it also depends on the ability of service providers to co-ordinate at the level at which they naturally come together i.e. that of real places and real people. This implies the opposite of top-down bureaucracy – of which fake market mechanisms are not the only manifestation.

Furthermore, it would be good if those who advocate the Seddon approach would acknowledge that the “ingenuity and innovation” that he says emerges naturally, can be squashed by institutional attitudes and cultures that have nothing to do with market ideology.

Even when public service institutions are given a free hand, some will fail through their own fault. It is therefore vital that service users have a choice – not in the sense of irrelevant consumerism – but so that they are never captive to an abusive producerism. Providers should always be aware that the people they’re supposed to serve can vote with their feet as well as at the ballot box.